Borrowing
The Collateral Pools allow borrowers to deposit collateral and obtain a percentage of borrowing capacity, but suppliers cannot earn any interest from the collateral pool. Borrowers who want to borrow from the asset pool must first deposit collateral into the collateral pools, your collateral will be stored safely inside your Obligation object.
To control the ratio of coins that can be borrowed out using a collateral coin, we need a parameter called Collateral Weight in each of the Collateral Pools. For example, if you deposited 1 BTC to a Collateral Pool and the BTC price at the moment is $10,000. And the Collateral Weight of the BTC Collateral Pool is 70%. That means you can only borrow out 70% of your BTC coins value or equal to
$10,000 x 70% = $7,000 .Collateral Weight usually has a value below 1.
How much you can borrow from the assets pools depends on your collateral values. Your collateral value is determined using this formula:
Any changes regarding the Collateral Weight of a collateral pool that you deposited into will affect your Collateral Value.
There are multiple coins that have a volatile price. One of the solutions to protecting users from volatile coins, we create a borrow weight feature so borrowing a volatile coin will be much “expensive”. The terms of expensive here mean you can only borrow less volatile coins with such collateral. Borrow weight will affect the amount of debt you have. This is how your debt is calculated:
For example, there are SUI and SCA assets pools.
SUI has a more stable price rather than SCA, hence we set the Borrow Weight to be 1 and 1.5 respectively. and then you deposited 1 BTC that is worth $10,000 to the collateral pool with Collateral Weight equal to 70% and your collateral value is $7,000 (70% of $10,000).
Let’s say the price of SUI is $5 and the price of SCA is $3. With $7,000 you can borrow out 1,400 SUI but for the SCA you can only borrow out 2333,33 SCA. 1,400 SUI is equal to $7,000, but 2,333 SCA is only equal to $4,666.66. This is because SCA has a borrow weight of 1.5, borrowing an SCA will be calculated as borrowing 1.5 times a bigger amount of SCA.
A flash loan is a type of loan where a user borrows assets with no upfront collateral and returns the borrowed assets within the same blockchain transaction. Because Scallop only charges fees according to the time value of the coin, and from the blockchain's perspective flash loans are held for a duration of 0 seconds, they are entirely free on Scallop (ignoring Sui gas fee costs).
Last modified 10d ago